Leasing Vs. Owning Commercial Office Space
Posted in Office Space Rental on August 28, 2014
Looking for office space for your Albany business? Wondering whether you should purchase or lease commercial office space? Read below for the pros and cons of each (leasing vs. owning).
- Purchasing can put a burden on your budget. But if you have a down payment and a good credit score (to help ensure a lower finance rate for your mortgage), purchasing property can be a better option over time. This particularly is true if commercial space is projected to increase in value over the coming years (thus providing you with a profit if you ever do sell and/or allowing you to charge higher rates yourself should you ever decide to lease the space you’re now in sometime in the future).
- In fact, depending on your goals for your business, you could refinance the mortgage on one property to make a down payment for another, renting out one to a tenant or tenants. Do this over again over the years and your company could become more than just a widget maker or service provider: your company also could become something of a real estate empire.
- Rents DO go up. Your mortgage payment won’t and you can even refinance in a few years to a lower rate (although rates in 2014 are pretty darn low!).
- If you want to gut the entire building and have just one large room, you can. If you want to configure the building to have four large corner offices on each floor, you can. If you want to build a green building from the ground up, you can.
- If you want all bright yellow walls, or paint them a soothing blue, you can. If you want to make sure no employee can raise the AC higher than 78 degrees ever you can. In other words, it’s your building; do as you see fit.
- Just starting out? Then leasing probably is your best bet because you don’t need to have amassed a down payment. If you’re running lean and mean (as most startups are), you can use any capital amassed as you grow to keep on growing.
- Just as renting a home allows you to pick up stakes relatively easily when opportunity strikes elsewhere, so does leasing an office allow you to move to another location when your company grows too large for your current site, or to move to another region should business require it.
- You’ve no need to worry about fixing things when they break. Lease office space, and your landlord performs those tasks.
- If you think your business is going to grow quickly, leasing allows you to see if it really does. Then you can go about buying a commercial property. If it doesn’t, you can stay put. Or, if it grows more slowly, you can expand more slowly.
- Buying a property has its own risks, most obviously the fact that property doesn’t always appreciate and tenants don’t always pay on time, or they’re hard to find.
Bottom line: leasing gives you more flexibility and costs your company less in the short term. Buying might create income for you in either property appreciation and/or rental income, but there are no guarantees of appreciation or good tenants.